Audacy files for bankruptcy protection

[Note: This story was updated on Jan. 11 to highlight that Audacy is utilizing a prepackaged bankruptcy process.]

Audacy, one of the biggest radio broadcast companies in the United States, is filing for prepackaged Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas.

In a statement issued on Jan. 7, the company said that it had reached an agreement “with a supermajority of its debt holders on balance sheet deleveraging transaction that will equitize over 80% of the company’s debt and establish a robust capital structure to drive long-term growth.” The statement went on to say that through the restructuring, Audacy and its debtholders will undertake a deleveraging transaction to equitize approximately $1.6 billion of funded debt, a reduction of 80% from approximately $1.9 billion to approximately $350 million. “The company does not expect any operational impact from the restructuring, and trade and other unsecured creditors will not be impaired,” the statement emphasized.

David J. Field, chairman, president and CEO of Audacy, said, “Over the past few years, we have strategically transformed Audacy into a leading, scaled multi-platform audio content and entertainment company through our acquisition of CBS Radio and by building leading complementary positions in podcasting, audio networks, live events, digital marketing solutions and our direct-to-consumer streaming platform.”

We believe Audacy will emerge well-positioned to continue its innovation and growth in the dynamic audio business.
David J. Field, chairman, president and CEO of Audacy

So, where did things go wrong? Field added that while the company’s transformation enhanced its competitive position, the “perfect storm” of sustained macroeconomic challenges over the past four years facing the traditional advertising market led to a sharp reduction of several billion dollars in cumulative radio ad spending. He said these market factors severely impacted Audacy’s financial condition and necessitated a “restructuring” of its balance sheet. An upbeat Field added, “With our scaled leadership position, uniquely differentiated premium audio content, and a robust capital structure, we believe Audacy will emerge well-positioned to continue its innovation and growth in the dynamic audio business.”

Audacy’s announcement sent a shock wave through the industry. The company swings significant lead. It owns over 200 radio stations across the United States and some of its most iconic radio brands, including LA’s KROQ, San Francisco-based KCBS, and New York’s 1010 WINS news station and sports station WFAN.